South Korean shares posted their first gain in five sessions on Monday, as Hyundai Motor Co and other exporters gained on data showing stronger-than-expected US economic growth in the third quarter.
Kookmin Bank set up the prospect of more gains on Tuesday after the country's top lender posted a record quarterly profit just after the market close and forecast a stronger 2006.
Kookmin had ended up 1.78 percent to 57,300 won ahead of its results, which came after the market close.
KTF Co Ltd, South Korea's No 2 mobile phone operator, surged 4.19 percent to 22,400 won after posting a 42 percent rise in quarterly profit on Monday, with its sales topping market estimates.
The benchmark Korea Composite Stock Price Index (KOSPI) rose 1.52 percent to end at 1,158.11, reversing a four-day slide.
"The US GDP report was quite positive, although, personally, I'm still worried about rising (US) rates, which have the potential to affect foreign investment in Korea," said Kim Hyun-tae, a fund manager at Landmark Investment Management.
Local shares fell 5.15 percent in October, declining steadily since hitting a record high of 1,246.41 on October 5. The main index was pressured in part by a steep sell-off by foreign investors, who have been net sellers of local shares for 26 out of the past 27 sessions, offloading around 3.5 trillion won ($3.36 billion) worth in local shares during that period.
Analysts have attributed their selling to profit taking from recent highs and due to a weakening won currency, which could dent their gains on the stock market. Overseas investors sold a net of some 87 billion won worth of shares on Monday.
US stocks rallied on Friday after data showed the US economy grew at a stronger-than-expected 3.8 percent annual rate in the third quarter, while core inflation, which exempts food and energy, declined in the third quarter.
The report came ahead of an expected interest rate hike by the Federal Reserve on Tuesday. Flat panel maker LG.Philips LCD Co Ltd advanced 3.21 percent to 38,600 won, while Hyundai Motor, the country's top automata, rose 2.41 percent to 76,600 won.
The United States accounts for around one-fifth of South Korea's total exports. Shares rose despite a report on Monday showing South Korea's service sector output shrunk for the first time in five months in September.
"Nobody really thinks domestic demand is going to turn around and dry up," said Jason Hawing, a strategist at Wooer Investment and Securities.
"A recovery will continue, although it may be at a slower pace."
South Korea's annual economic growth will likely pick up to the fastest in 1-1/2 years in the fourth quarter led by healthy demand both at home and abroad, Finance Minister Han Duck-soo said on Monday.
Hyundai Department Store Co Ltd surged 4.05 percent to 69,300 won, with investors betting third quarter earnings would be strong, as share prices rebounded from a 7.1 percent fall last week.
Steel maker POSCO Co Ltd rose 2.92 percent to 211,500 won, amid hopes China's steel makers would cut production, helping ease a supply glut, to help stem falls in their profitability.
SK Corp, South Korea's top oil refiner, rose 3.08 percent to 53,500 won on media reports that South Korea's top oil refiner has lowered its bid to acquire smaller rival Intone Oil Refinery Co Ltd.
Non-life insurer Samsung Fire and Marine Insurance Co ended unchanged at 99,000 won after it said net profit in the April-September half year had risen 7 percent from a year.
Trade volume reached around 319.5 million shares worth 2.6 trillion won compared to 341.2 million shares worth 2.9 trillion won on Friday.
Gainers outnumbered decline's by 493 to 238 with 78 titles ending flat.
Retail investors sold a net 52.7 billion won of shares, while institutional investors bought a net 128.2 billion won.
The December KOSPI 200 futures index rose 2.20 points to 148.50, while the underlying KOSPI 200 spot index advanced 2.29 points to 148.84.
South Korea's junior and tech heavy Kosdaq market fell 1.13 percent to finish at 587.46.